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BoE governor proposes IMF merger with G20

The G20 should “metamorphose into a Governing Council” for the International Monetary Fund, as the former could be the ideal forum to implement the requisite reforms to fix global economic imbalances, Bank of England Governor Mervyn King suggested on Tuesday.

Speaking at Exeter University, King slammed the idea of another Bretton Woods conference as "wholly impractical".

King urged countries to combat unbalanced growth and misaligned real exchange rates to guard against the rise of “self-defeating protectionist” responses. He called on surplus nations like China, Japan, Germany and oil exporters to “ expand domestic demand and allow their trade surpluses to shrink”.

The BoE governor warned that low-savings nations - such as the US and UK - would no longer be in a position to assume the role of consumer of last resort, thereby mandating “changes in prices and most obviously in real exchange rates”.

The UK economy faces a “long period of healing” recession and that the government must significantly slash its budget deficit, the BoE chief said, adding unemployment is likely to remain high.

Separately, David Blanchflower, the former monetary policy committee member who was a lone voice proposing rate cuts during the downturn, has called for the panel to be dissolved as it is "not fit for purpose". Writing in the New Statesman, Blanchflower says that the MPC “missed the recession entirely”, adding the committee’s “failure to act” prolonged the recession.